APPA Says Record Shows Support for Joint Transmission Ownership Opportunities for LSEs

by Paul Ciampoli
APPA News Director
October 3, 2022

The record of a pending Federal Energy Regulatory Commission (FERC) proceeding offers specific support for the Commission to find that promoting joint transmission ownership opportunities for load-serving entities (LSEs) is likely to provide the benefits the Commission projects, the American Public Power Association (APPA) said in reply comments filed at FERC.

The Sept. 20 reply comments were made in a FERC proceeding related to regional transmission planning and cost allocation (Docket No. RM21-17-000).

In a Notice of Proposed Rulemaking (NOPR), FERC outlined significant changes to its transmission planning rules, including a proposal to promote joint ownership of transmission lines through the use of a conditional right of first refusal (ROFR) to build jointly owned lines.  In comments filed in response to the NOPR, APPA urged FERC to adopt a more narrowly tailored version of the proposed conditional ROFR focused on promoting joint ownership opportunities for public power utilities and other LSEs.

The proposed reforms outlined by FERC in the NOPR are intended to remedy deficiencies in the Commission’s existing regional transmission planning and cost allocation requirements to ensure that Commission-jurisdictional rates remain just and reasonable and not unduly discriminatory or preferential.

“Focusing the conditional ROFR on joint ownership opportunities for LSEs would not be unduly discriminatory,” APPA said in its reply comments.

APPA’s proposal for a conditional ROFR that is focused on LSE joint ownership is consistent with the specific statutory requirement in Federal Power Act section 217(b)(4) that the Commission exercise its authority in a manner that facilitates the planning and expansion of transmission facilities to meet the reasonable needs of LSEs to satisfy the service obligations of LSEs, the trade group went on to say in the reply comments.

APPA said it recognizes that many commenters have expressed concern that any ROFR for incumbent transmission providers, even a conditional one, would be a retreat from competition.

“APPA acknowledges that transmission competition may be a mechanism to control rising transmission costs, which is a significant concern for APPA members and other transmission customers. The premise of APPA’s joint ownership proposal is that it would make it more likely that the benefits envisioned by the Commission would actually be realized,” APPA said.

Those benefits include helping to increase opportunities for investment in the transmission system and promoting market entry and greater diversity of participation and perspectives in transmission ownership, APPA told FERC.

“These goals are pro-competitive and APPA’s proposed narrow ROFR would provide an option to achieve them.”

Moreover, APPA underscored the fact that its proposal for a narrowly tailored conditional federal ROFR would not be mandatory. “APPA does not support proposals or comments in favor of a mandatory ROFR, conditional or otherwise.”

APPA also said it does not agree with comments that if the Commission decides to reinstate some form of ROFR, it should do so on a nationwide basis or permit the states to make determinations regarding competitive processes.

Instead, APPA’s proposal allows that in those areas where regional transmission planning stakeholders believe that transmission competition is beneficial, they could opt not to implement a conditional ROFR approach.

If the Commission declines to adopt a conditional ROFR in any final rule in this proceeding, APPA urged it to promote public power joint transmission ownership through other methods.

There is a substantial record “in this docket demonstrating the benefits that joint ownership opportunities for public power and electric cooperative LSEs are likely to produce.” 

The Commission should pursue policies to promote these benefits even if it decides not to adopt the conditional ROFR, APPA said.

“The Commission could, for example, seek to promote joint ownership through the transmission planning process by specifying that joint ownership of transmission facilities is a positive factor in evaluating transmission solutions in regional transmission planning processes, including competitive solicitations,” APPA said.